Pricing: It’s All About Trust

Do Not Rely On Those Who Do Not Care About You

One byproduct of the economic recession is that companies are afraid to make money.

That’s not to say they’ve given up on maximizing profits, just that they’re trying to minimize the public perception of that profit, and keep any increase in fees as low profile as possible.

Recent examples of this include the Netflix pricing model changes, Bank of America’s $5 debit card fee and Verizon’s $2 bill pay fee.

In each case, the company raised the amount that it charges customers, received a wave of negative feedback from those customers (often through social media) and then reverted to the previous pricing structure to try and keep its customers happy.

The reason these price increases are met with negative feedback is that consumers are smarter. They know more about a company’s product, they know more about a company’s costs, and they have a better idea of what they should be paying for the product or service a company provides.

Just look at the recent changes J.C. Penney made in response to the smarter consumer. According to CEO Ron Johnson, while discussing his company’s new simplified pricing strategy,

The customer knows the right price. To think you can fool a customer is kind of crazy.

In this new economic environment, any company that appears to be making excess profit, or appears to be taking advantage of any opportunity to make excess profit, is villainized by a battered public that now believes most companies are trying to take advantage of them in any way possible.

This public reaction can cause problems for companies that legitimately need to raise prices in order to survive as a business, or to ensure their future survival. Markets change, rules and regulations change, and the competitive landscape changes, all of which can require a company to adopt new costs, or a whole new pricing structure.

So what should a company do when it needs to increase the amount it charges customers?

First, be upfront about the reasons for this new pricing structure.

Have supply costs changed? Has the competitive landscape shifted? Have new regulations forced the entire industry to change and adapt to survive?

Tell the customers.

Second, be upfront about why you need to raise prices instead of adapting to these changes in some other way.

Does your product rely on a single supplier of a specialized good? Has a competitor undercut you with a business model that’s not sustainable in the long term? Are the new rules and regulations that you’re now facing unavoidable for everyone in your industry?

Tell the customers.

Lastly, be upfront about what the increased income from the new pricing structure is going to be used for.

Is the increased revenue going directly to a supplier to cover increased costs? Are you building a stockpile so the company can survive short term shifts in the market? Is the price increase being used to pay new fees and regulations?

Tell the customers.

They’re going to find out anyways, or they’re going to assume the worst, so you might as well steer the conversation in a favorable direction, and make sure everyone is talking facts, not fiction.

If you can’t answer these questions publicly, either because you don’t need to raise prices to stay in business, or because you’re just trying to give shareholders a few extra pennies or the c-suite another day off, then maybe it’s time to re-evaluate the decision to raise prices in the first place.

Of course this will necessitate carefully crafted words from the Marketing and PR departments, and I’m not saying you need to share your entire business model with your customers, but an honest explanation can go a long way towards building trust that can pay dividends in the long run through an increase in loyalty between the customer and the company.

At the end of the day, it’s all about trust.

If you raise prices, and then lower them again, consumers will not trust you. They will think that you either didn’t need to raise prices in the first place, and were just gouging them for extra cash, or you did need to raise prices, and are going to find another, less obvious way of getting that money from them.

For example, look at this Tweet from Harry McCracken:

Kia Gives YouTube Five Hours of Adriana Lima

Adriana Lima Kia

Of all the things I’ve seen companies do to hype their Super Bowl commercial this year, I think Kia’s is the most interesting.

While the spot itself is great, and features the entertaining mix of Adriana Lima, Chuck Liddell and Motley Crue:

It’s actually the video that appeared in the YouTube sidebar while I was watching this spot that caught me by surprise:

What you’re looking at is a video titled “5 Hours of Adriana Lima” that just features a five hour long loop of slow motion b-roll footage of Adriana Lima waving a checkered flag.

While a video like this (an endless loop of eye candy) is common on YouTube, the fact that this video was created by Kia’s official YouTube channel, and not by some random YouTube user that was hoping for a few extra views, shows that Kia actually understands the YouTube audience in a way that few brands manage.

We live in a remix culture, and while it might surprise you that a video like Nyan Cat can get 62 million views, what should really surprise you is that the same video, but slightly tweaked and re-released as “Nyan Cat – OMEGA Extended Edition [3 AND 1/2 HOURS OF NYAN SPLENDIDNESS]” can get 4.8 million views, and that the same video, but again slightly tweaked and re-released as “Nyan Cat 100 HOURS” can get 3.7 million views.

Want more?

A remix of the remix, called “Nyan Troll – 10 hour edition“, just crossed the million view milestone.

Crazy, isn’t it?

While I’m sure the number of people who have watched these videos from beginning to end can be counted on a single hand, these videos exist because people love to feel like they’re part of an ‘in crowd’ that understands the humor in a 100 hour long remix of a dancing rainbow cat.

But don’t underestimate the value of these people.

They are the viewers that will send videos like this to every one of their friends, because they want to challenge them to watch it, and though no one will, they’ll all laugh together at the silliness of it all.

They are the taste makers and the viral creators, and they can drive a tremendous amount of traffic to a video if they get a quick laugh and want to share that laugh with others.

Kia Adriana Lima

Surprisingly, Kia seems to understand that behavior more than any other brand, and so they developed content that caters specifically to it. And again, I’m sure the percentage of viewers that will watch more than a few minutes of Adriana Lima’s flag waving performance is extremely small, but that’s not the point.

The point is that users will have a quick laugh, share it with their friends, and help get the Kia brand in front of more eyes than videos that cost hundreds of thousands of dollars more to produce ever manage.

Sure, the value of each individual viewer might be extremely low, and only a small percentage will even remember that Kia brought them the Adriana Lima video in the first place, but considering the cost to produce the video (setting aside the fact that it was shot while filming a spot that did cost at least a million dollars to produce) and the time it probably took to loop together a five second clip into a five hour video, I’d say it was time and money well spent.

Shazam Could Replace The QR Code

QR Code Death

Admit it: The QR Code is never going to catch on with mainstream users. (Hell, it’s barely getting used by advertisers, and we’ll try anything once.) Asking people to download and use a 3rd party app so they can scan a code to get mysterious content related to an ad is a bit much, and until Apple decides to include a QR code scanning app with every iPhone, they’re just not going to get used by more than a fringe minority of the mobile audience.

That said, the reason advertisers want QR codes to take off is clear: We live in an increasingly mobile world, and with campaigns spreading across multiple mediums, there needs to be an easy way to connect analog content with digital content so we can create a more interactive and immersive experience.

While NFC holds promise as a potential solution, it requires broad adoption by phone manufacturers, and there’s little indication we’ll see that any time soon.

So is it time to face the facts and admit that it will never be easy to connect ads to a mobile experience?

Not exactly.


Enter, Shazam.

Shazam debuted as an app that recognizes the audio from music and reports back on what song is currently playing. The technology has since been repurposed by companies like Old Navy, General Mills and News Corp. to recognize commercials, allowing viewers to tag the audio of a spot and receive additional content from the brand.

If you haven’t experienced one of these enhanced ads, check out this Pillsbury Crescents commercial which returns recipes to users who Shazam the ad when prompted:

While this works well in a controlled environment like the living room, there’s no reason the same technology can’t be used in other places to connect ads to a mobile device.

See where I’m going with this?

Calvin Klein recently teamed up with Shazam to create in-store sound installations, and proved that the process can be used for more than just tagging TV.

The interaction is simple: When a customer is near the branded podium, they open the Shazam app and scan the song that’s playing through the speaker. In return, they receive exclusive content like in-store promotions, a complimentary download of an exclusive song, and a Calvin Klein holiday wallpaper for their mobile device.

According to David Jones, VP of Marketing at Shazam:

Calvin Klein is an iconic fashion brand known across the globe, and Shazam is incredibly excited to work with them on their new holiday campaign and in-store sound installations. Shazam